Challenges and updates on cross-border work

Remote work knows no borders - unfortunately, the rules still do. Discover why modernizing tax and social security is now urgent.

Cross-border work in various forms is growing fast, but applicable frameworks have not evolved at the same pace creating challenges for both employees and employers. New solutions address an upper level of structured cross-border telework (from home). Small portions of unforeseen and occasional telework remain a challenge that can lead to compliance error and ultimately legal abuse.

The new reality of cross-border work

The world of work has changed dramatically. Technology, talent shortages, and new employee expectations have made cross-border work in various forms common. Employees increasingly expect to work from anywhere, and employers want to offer this flexibility to stay competitive.

However, legal and administrative frameworks have not evolved at the same pace. This gap creates uncertainty and risk for both employers and employees, particularly in short-term, spontaneous, or employee-driven arrangements.

Recent EY surveys confirm this tension: while most organisations want to offer international flexibility to attract and retain talent, many feel forced to restrict it because they must manage each case individually and face unclear or burdensome compliance rules.

Why today’s rules need urgent updating

The shift toward global mobility exposes significant weaknesses in current tax and social security systems. A series of Scandinavian legal research has recently found major ambiguities when managing small amounts of cross-border work. As highlighted in the articles, existing rules were not built for a global workforce. The research demonstrates that even short periods of cross-border remote work can:

• trigger unexpected tax liabilities,
• cause employees to frequently change social security affiliation, and
• create obligations for employers to register, report and withhold tax and social security contributions abroad.

The lack of coordinated or modernised rules can also lead to both double taxation and non-taxation. Administrative requirements—such as obtaining A1 certificates (if possible) or tracking days worked in every jurisdiction—are often disproportionate for short-term cross-border work. Even mundane situations of occasional cross-border work from home may cause legal ambiguities in the applicable social security legislation.

Minimal cross-border work may trigger reporting obligations and administrative requirements to track employees’ location on a day-by-day basis to assess legal and administrative implications. As the correct management of the rules becomes increasingly ambiguous, the responsibility for the correct handling of the rules is to an increasing extent placed with the employer and employee. Individually, these issues seem manageable. Combined, they form a structural barrier to mobility, and may leave a door open for error, contradicting obligations - and ultimately the risk of abuse.

What’s done to date

Recognizing these global challenges, the Organisation for Economic Co-operation and Development (OECD) agreed in April 2025 to further assess the issue connected to global mobility of individuals. In November 2025, a Public Consultation on Global Mobility was released followed by a Public Consultation meeting held on 20 January 2026. The focus is to understand the realities of cross border work and diagnose the pressure points to better scope and prioritize future work on this topic.

Key themes include:

• Personal income tax challenges.
• Administrative burdens
• Interaction with social security
• Corporate tax exposure

The OECD called for input from businesses, employees, governments, and advisers. This is a critical step toward a framework that reflects modern work patterns rather than those of the past. EY has contributed with our comments and please see here for a summary of the meeting.

In November 2025, the new OECD commentary was published addressing amongst others the increase of cross-border remote work to create better certainty around PE risks. The commentary clarifies when the home or other relevant place can be considered a place of business for the company by introducing a 50 percent threshold. In general, in a case where an individual works less than 50 percent of their total working time over a period of 12 months, the home or other relevant place would not be considered a place of business.

Currently, the EU Administrative Commission on Social Security Coordination is working on a revised version of the 2013 Practical Guide on applicable legislation for European employees and businesses. When finalized, this will provide further clarity to certain cases (including telework) but cannot remedy the fundamental legal ambiguities connected with occasional work abroad. Also, the European Commission plans to launch its Fair Labour Mobility Package initiative in 2026. EY has provided the European Commission with an early-stage hearing input pointing out some major subjects for amendment based on a targeted input from European businesses. During the first half of 2026, the Cypriot EU Presidency is pushing to close EU legislative negotiations that might relax the A1 requirement for certain short-term business travelers. A legislative proposal is being prepared to turn an optional Framework Agreement on Teleworking into binding EU-law.

The European Court of Justice has been presented with a number of cases involving occasional work. In general, the Court has found that various rules designed to balance the consequences of working abroad may not apply to such work.